Feds Raid Stillwater Mayor's Business

Federal agents have raided the accounting business owned by the mayor of Stillwater.

Agents from agencies including the FBI, ATF and the Internal Revenue Service conducted the raid Thursday morning at Customized Payroll Solutions.

FBI and IRS agents hauled out boxes of evidence in what the IRS is calling "an enforcement action."

"What's an enforcement action, it can be a search warrant or an interview anything where the police need to be out here,” said IRS special agent Vicki Petricka.

In a statement, a spokesperson for Mayor Ken Harycki insists the investigation involves a former client, and Harycki is cooperating with authorities.

However, sources tell KSTP reporter Beth McDonough Harycki is the target of the investigation.

KSTP obtained bookkeeping documents in which former employees allege Harycki falsified the payrolls of some companies including Minneapolis Federation of Teachers, Mary, Mother of the Church, Model Health Care and Budget Towing.

Several employees of one firm told KSTP off camera, their timesheets were tweaked and they didn't get money they were owed.

Other records accuse Harycki of underreporting income taxes to the state and federal government.

KSTP obtained a letter from the Minnesota Department of Economic Security, which orders Customized Payroll Solutions to turn over past due unemployment taxes.

The bookkeeping record suggests Harycki ordered workers not to pay "941", which is the quarterly report on federal tax returns.